Conagra to Buy Pinnacle Foods: Is this the Beginning of a Mega-Consolidation?

News broke yesterday that Conagra Brands will buy Pinnacle Foods, tying together two midsize American food brands. The big companies selling food in America have been having trouble, and it’s worth considering if this may be the first step in what may be a necessary consolidation of the industry. The WSJ Logistics Report explains:

Big Food is getting even bigger. Conagra Brands Inc. will pay $8.2 billion to buy Pinnacle Foods Inc., doubling down on frozen foods and taking a new step toward resetting food supply chains in a fast-changing market. The deal would create a conglomerate with about $11 billion in annual sales, the WSJ’s Annie Gasparro reports, and a pull together a wide swath of brands found in most American pantries. The deal comes as the food industry is consolidating as companies combat the growing clout of grocery-store giants like Walmart Inc. and Kroger Co., which have pressured food makers to reduce prices and invest in their supply chains. Higher shipping costs have added to the pressure. General Mills Inc., which has struggled with soaring transportation and commodity costs, says it will eliminate 625 positions after projecting an earnings shortfall in its recently ended fiscal year.

The deal will make the combined Conagra/Pinnacle second in frozen foods only to European-giant Nestle by bringing together brands like Healthy Choice and Birds Eye. Annie Gasparro reports further here.

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306.
He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris.
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